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Retirement Planning > Social Security > Claiming Strategies

Can You Spot the Social Security Claiming Mistakes? Part 2

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What You Need to Know

  • There were two other mistakes in the advice from the financial professional in Part 1.
  • Since Lucia is still subject to the earnings limit test, she likely will get no Social Security payments in 2021 or 2022.
  • Spousal benefits are based on the higher earner’s primary insurance amount, not the monthly amount the higher earner receives.

Editor’s note: This is Part 2 of the first “Connecting the Dots” column by Social Security and retirement specialist Marcia Mantell. In each column, she will feature real-life client issues regarding retirement and explain how advisors can solve those problems.

In Part 1, published April 30, we discussed some Social Security advice given by a financial professional. Did you spot his mistakes? 

This is not meant to be a throw-someone-under-the-bus situation. Rather, it’s a real example of how easy it is to miss the connecting dots when an advisor is asked a specific question out of context. It’s critical to take a step back and insist on a more comprehensive picture.

Where Part 1 Left Off

Tony (born in 1953) and his wife, Lucia (born 1956), thought they would get nearly $1,400 in extra cash each month because Tony is eligible for the “restricted application.” To do so, Lucia must claim her benefit early.

The advice they got did not factor in Medicare premiums and their income-related monthly adjustment amount (IRMAA) additional cost for Part B. Their actual Social Security checks would be cut in half, and they would not receive as much extra cash as they were promised.

But that is not the biggest problem with the advice they received. There are two other major flaws:

Lucia Will Not Receive Payments From Social Security!

Another easy-to-miss connecting dot is the earnings limit test.

The advisor didn’t ask for details about Lucia’s freelance income. She estimates she’ll bring in at least $50,000 this year from a multi-year contract, plus $40,000 already lined up for 2022.

Because Lucia will not reach her full retirement age (FRA) of 66 and 4 months until 2023, she is subject to the earnings limit test. Any income over the current $18,960 threshold will create a clawback of her benefits. In her case, her income reduces her payments in 2021 to zero, and likely zero in 2022 as well.

The one bright spot is that she’ll effectively eliminate her permanent reduction in benefits when she reaches her FRA. But the planned-for $1,380 in extra cash has dwindled to just $171 per month — the residual from Tony’s spousal benefit after Medicare Part B premiums are pulled out.

Getting the Technical Rules Right: Part 2

The second major flaw in the advice they received was the estimate of Lucia’s spousal benefit when she reaches FRA. 

Spousal benefits for the lower earner are often misinterpreted, especially when the lower earner will be paid their own smaller benefit in addition to a spousal top-up. The rule is that spousal benefits are always based on the higher earner’s primary insurance amount (PIA) — not the amount the higher earner actually receives.

For example, if the higher earner claims at 63, he’ll receive a reduced payment. But if the lower earner claims at her own FRA, she doesn’t receive half of his reduced payment, but rather half of his calculated PIA. 

It’s the same situation when the higher earner waits until 70, as Tony plans to do. He’ll get a 32% bump in his benefit to $3,800. Lucia, however, never gets $1,900. Her maximum benefit remains locked at half of his $2,800 PIA, or $1,400, for as long as she waits until her FRA.

The Result

The advisor mistakenly assumed that Lucia gets half of Tony’s $3,800 payment. He’s overstated her ultimate benefit payment by $500 per month. 

Tony and Lucia were very disappointed to learn all of this. Lucia ended up pulling her application for her own early, reduced Social Security benefits. Therefore, Tony cannot use the restricted application. Overall, these adjustments were the better option when all the pieces of their situation were connected.

The caution for financial advisors when one spouse is still grandfathered into the restricted application: Connect all the dots. What seems like a good idea and newfound cash might just backfire for the couple.

Marcia Mantell is the founder and president of Mantell Retirement Consulting Inc.a retirement business development, marketing & communications, and education company supporting the financial services industry, advisors, and their clients. She is the author of “What’s the Deal With Retirement Planning for Women?”, “What’s the Deal With Social Security for Women?” and blogs at


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